Entrepreneurial School Dropouts: A Model on Signalling, Education and Entrepreneurship
AbstractI present a theory on the relationship between educational choice and entrepreneurship in a labour market with asymmetric information. The model shows that, in a labour market where education is used as a signalling device, an imperfect relationship between productivity in education and in the labour market can lead to an equilibrium where a fraction of the high-ability individuals choose to quit school and become entrepreneurs. Using a comprehensive set of Norwegian register data, I find that this is prediction is confirmed empirically: Individuals combining low education with high ability have the highest entrepreneurship rates in the population.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Oslo University, Department of Economics in its series Memorandum with number 10/2012.
Length: 38 pages
Date of creation: 02 Apr 2012
Date of revision:
Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
More information through EDIRC
Entrepreneurship; self-employment; education; ability;
Find related papers by JEL classification:
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-15 (All new papers)
- NEP-CTA-2012-05-15 (Contract Theory & Applications)
- NEP-EDU-2012-05-15 (Education)
- NEP-ENT-2012-05-15 (Entrepreneurship)
- NEP-LAB-2012-05-15 (Labour Economics)
- NEP-LMA-2012-05-15 (Labor Markets - Supply, Demand, & Wages)
- NEP-URE-2012-05-15 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2007.
"Small Family, Smart Family? Family Size and the IQ Scores of Young Men,"
NBER Working Papers
13336, National Bureau of Economic Research, Inc.
- Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2010. "Small Family, Smart Family? Family Size and the IQ Scores of Young Men," Journal of Human Resources, University of Wisconsin Press, vol. 45(1).
- Black, Sandra E. & Devereux, Paul J. & Salvanes, Kjell G., 2007. "Small Family, Smart Family? Family Size and the IQ Scores of Young Men," IZA Discussion Papers 3011, Institute for the Study of Labor (IZA).
- Black, Sandra & Devereux, Paul J. & Salvanes, Kjell G, 2007. "Small Family, Smart Family? Family Size and the IQ Scores of Young Men," CEPR Discussion Papers 6443, C.E.P.R. Discussion Papers.
- Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
- Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 604-631, June.
- Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
- Cho, In-Koo & Kreps, David M, 1987.
"Signaling Games and Stable Equilibria,"
The Quarterly Journal of Economics,
MIT Press, vol. 102(2), pages 179-221, May.
- Tamas Bartus, 2004. "MARGEFF: Stata module to compute average marginal effects for categorical and limited dependent variable models," Statistical Software Components S445001, Boston College Department of Economics, revised 04 Sep 2009.
- Headen, Alvin E, Jr, 1990. "Wage, Returns to Ownership, and Fee Responses to Physician Supply," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 30-37, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rhiana Bergh-Seeley).
If references are entirely missing, you can add them using this form.